Bankruptcy is a legal option that offers financial relief for New Jersey residents. If you have overwhelming debt, Chapter 13 provides a way to deal with it on your terms. Many people wait too long before taking action due to the effect bankruptcy has on their credit. However, when debt piles up and bills go unpaid, it negatively impacts your credit score, regardless of a bankruptcy filing.
According to the U.S. Courts, Chapter 13 enables individual debt adjustment. Although it affects your credit, it doesn’t last forever. It also offers the opportunity to improve your score. Here are a few tips for moving forward after your case closes.
Learn about finances
Before your case closes, you must complete a personal finance management course. It teaches you how to make smart financial choices. The course focuses on a variety of money management aspects, including:
- Budget preparation
- Using credit effectively and wisely
- Dealing with unexpected financial crises
While this course teaches the basics, you may want to learn more by finding tools that help you stick with a budget or take advanced classes through a local or online school.
Get a low-limit credit card
Most people cannot manage expenses by using cash exclusively. Getting a low-limit credit card after bankruptcy makes sense from that aspect. If you want to rebuild your credit, this is also the easiest way to get started. A secured credit card can help you build credit and provide a cushion if you have unexpected expenses. This type of card starts building credit history immediately. Use the card for routine purchases, such as gas and groceries and pay the balance in full every month. This keeps the utilization rate at zero, which is a primary factor in your credit score.
Changing your spending habits and paying bills on time can help you manage your money and recover from bankruptcy with a higher credit score and a better understanding of finances. Chapter 13 can help you get back on track financially and move forward with the rest of your life.